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We wish to book a flat in my name. My father and I are planning to avoid a home loan at this point of time. Can the retirement benefits (PF, gratuity, leave encashment) of my father, who is due for retirement, be used for making payments towards the cost of my flat? If yes, will there be any tax liability either on me or my father?

—Sreekant Seetaraman,

There are exemptions in all retirement benefits. However, there maybe limits on this exemption depending on individual situations. PF is completely exempted from tax as of now irrespective of any situation. If your father is a Central or state government employee or a defense employee or an employee in local authority, then all his retirement benefits are exempted from any tax liability. If however, this is not the case then the following rules apply. In the case of gratuity payment, exemption will be limited to half a month’s salary, (on the basis of the average salary drawn in the last 10 months) for each completed year of service or Rs 3.5 lakh whichever is less. In the case of leave encashment, the exemption is limited to 10 months of leave encashment or an amount of Rs 3 lakh, whichever is lesser.

Can you advise me on how to improve my credit score with CIBIL? Since two years, EMI of my home loan and car loan are not paid regularly, and some cheques have bounced.

— KK Lashkari, Indore

If your financial situation has improved currently, prioritise your loan commitments and try to pay off all your debts. This will be updated in your CIBIL records by your bank. In order to improve your CIBIL score you can opt to use your credit card effectively by paying up dues on time every time in full and also handle future loans you may procure with great diligence. Though this will improve your credit score by leaps and bounds, you still will need to remember that your past repayment track record and your irregular EMI payments will have an impact on any future loan you might apply for and you might face difficulty in obtaining one. The bank always looks at the whole picture and does not take the credit score alone at face value when granting a loan. You may have to wait for around the mandated 7 years before